Make prescription drugs affordable

The legalization of prescription drug importation continues to be hotly debated throughout the country. Those in favor cite the need to make drugs affordable for the uninsured and senior citizens on fixed incomes, and to pressure pharmaceutical manufacturers to cut prices in the U.S. Those opposed cite the potential safety risks posed by counterfeit drugs entering the country as well as the negative impact that reduced domestic prices could have on research and development spending.

I weighed in on this topic recently before the federal Department of Health and Human Services' Drug Importation Task Force.

My message was simple: Importation is occurring because drug prices vary arbitrarily-- they're lower in foreign countries because of price controls and higher here because the U.S. market is the only place where manufacturers can achieve sufficient profits to cover the costs of developing new drugs.

This difference in pricing is the root cause of the drug-importation problem, and it is what we need to fix.

The answer is not price controls--our economic system is unmatched anywhere else in the world, and letting the market freely set prices is an important element of our success. Moreover, the pharmaceutical industry must be able to earn adequate returns to continue innovating and delivering breakthroughs in health care.

The answer is for the pharmaceutical industry to move toward a global pricing model in which prices in different countries are set by the normal economic forces of supply and demand, as they are for virtually every other traded product. Drug importation might look like free trade, but this is an illusion. As long as prices in other countries are held artificially low through price controls, drug importation is not free trade, but rather the importation of price controls.

Moving to a new global drug-pricing model will obviously take time, during which millions of Americans will still need help with the cost of their prescription drugs. We cannot continue to look the other way while they play "Prescription Roulette," forced to go outside the U.S. system, which is designed to ensure safety, in order to save money. To deal with this real and pressing need, and to avoid the trap of permanently importing price controls, the Bush administration and Congress should legalize prescription-drug importation for a temporary period, perhaps three to four years, to allow people to more safely access drugs from other countries while the longer-term issues are solved.

Today's practice of unregulated direct-to-consumer importation has significant risks. While Canadian pharmacies are fundamentally safe--a licensed Canadian pharmacy meets essentially all the same standards as one in the U.S.--not all the international pharmacies are legitimate pharmacies, and there are many claiming to be Canadian that are actually operating from other countries. U.S. customs officers have found many packages containing counterfeit drugs, ones with labels in a variety of foreign languages, and even packages with pills in plastic bags or wrapped in tissue with no labeling at all.

Allowing this unregulated, "Wild West" model to continue is tantamount to turning our backs, when it comes to safety, on those who are least able to pay for drugs. And attempting to legalize this model, with shipments from hundreds or thousands of foreign pharmacies directly to American consumers, seems hopelessly complicated and expensive, and would be very difficult to regulate.

I propose a different, simpler route--bulk importation. In the U.S. we already have a drug distribution system that handles more than 3 billion prescriptions a year safely and effectively, where pharmaceutical manufacturers deliver product to dozens of distributors, who then deliver it to more than 55,000 licensed pharmacies. We don't need a new distribution system. What we need is a way to get safe, unadulterated drugs into the system we have.

To do that, we can develop a system to certify specific foreign drug suppliers, probably wholesalers in other countries, who would sell to domestic wholesalers and then on to retail pharmacies. We would also need to track where the drugs come from and the stops they make along the way. That will cost money, so I also propose levying a fee on foreign suppliers to pay for the certification, inspection and regulatory actions needed to make this system work. There are also other details that would need to be worked out, including how to maintain an adequate supply of product and ensure intellectual property rights are protected. But these challenges can be overcome if all parties involved commit to working to resolve them.

Millions of Americans have already opted to import drugs because they can't afford not to. The country needs to face this issue and devise a solution. Allowing temporary bulk importation while the pharmaceutical industry develops a global pricing system makes sense, but only if we leverage our country's existing infrastructure to keep down additional costs, and most important, to ensure that the drugs sent to consumers from foreign pharmacies are safe.